Category Archives: Building Plans

A total of 276 building plans were approved by the City of Windhoek in July, 42 more than the 234 approvals in June. The value of building plans approved in July was N$214.7 million, which is only the second month this year in which approved plans surpassed the N$200 million mark, the other being January that registered N$269.3 million worth of approvals. A total of 260 buildings with a value of N$78.0 million were completed during the month of July. On a year-to-date basis, 1,251 plans have been approved, 192 more than the 1,059 plans approved over the same period last year. The year-to-date value of approved building plans currently stands at N$1.0 billion, which is 37% lower than the N$1.6 billion worth of approvals registered over the same period in 2017. On a twelve-month cumulative basis, 2,115 building plans worth approximately N$1.6 billion have been approved, 34.3% lower in value terms when compared to the same measure as at the end of July 2017.

Additions to properties generally make up the majority of the number of building plan approved. Additions accounted for 145 of the total 276 plans approved in July, 19% lower on a m/m basis. Year-to-date, 915 additions to properties have been approved, increasing by 6.4% y/y, but decreasing by 7.6% y/y in terms of value to N$621.2 million.

New residential units were the second largest contributor to the number of building plans approved in July, registering 131 approvals compared to the 53 registered in June. Year-to-date, 317 new residential units have been approved. This is an increase of 143 approvals when compared to the corresponding period in 2017. In value terms, N$342.9 million worth of residential plans have been approved year-to-date, a 15.3% increase when compared over the same period in 2017.

For the first time since May 2010 there were no approvals for commercial and industrial properties. The number of approvals for commercial and industrial properties have been languishing in single digit territory since September 2016 and have an average approval rate of 4 approvals per month over the last 12 months. The inactivity in the commercial and industrial space is reflective of the contraction in construction activity and recession in the economy as whole.  Business confidence remains subdued, illustrated by the lack of capital investment. On a 12 month-cumulative basis, the number of commercial and industrial approvals has decreased by 25.4% y/y in July to 44 units, worth approximately N$112.2 million, a huge decrease of 85.8% in value terms over the prior 12-month period.

During the last 12 months 2,115 building plans have been approved, increasing by 14.0% y/y. These approvals were worth a combined N$1.6 billion, a decrease in value of 34.3% y/y. The number of building plans approved, on a cumulative 12-month basis, has been steadily increasing since December 2017. The growth in the cumulative number of plans approved has been driven mainly by approvals in additions to properties and new residential units which are of lower relative value. The overall decrease in value of cumulative plans approved is highly concerning as, even in nominal terms, this shows a substantial decrease of construction activity in the capital. Growth in commercial and industrial construction activity remains extremely subdued as the decrease (on a 12-month cumulative basis) in credit extended to corporates also reflects.

Significant deteriorations of the Turkish and Argentinian currencies have led to increasing fears of widespread emerging market contagion. The result has been an emerging market sell-off that has negatively impacted the rand. Policy uncertainty with regards to land reform has further exacerbated the issue. To make matters worse the SA economy has entered into a recession, contracting by 0.7% in Q2 following a revised 2.6% (previously 2.2%) contraction in Q1. The rand spiked above R15.50 to the US dollar in the aftermath of the GDP data release. The South African Reserve Bank (SARB) will closely monitor the weakness in the rand, as well as for how long this weakness persists, since it presents upward risks to the SARB’s inflation forecast. Prolonged weakness to the rand could lead to inflation breaching the SARB’s inflation target band, the result of which would be a monetary policy tightening cycle which would put further pressure on economic growth. Should the SARB move in this direction, which the market is currently expecting and pricing in, the Bank of Namibia will have to follow suit because of the currency peg. Such monetary tightening in Namibia would be a further drag on the fragile economic recovery we are experiencing at present.

A total of 234 building plans were approved by the City of Windhoek in June, which is 73 more than the 161 approvals in May. The value of building plans approved in June was N$138.4 million, an increase of 8.4% from the N$127.7 million worth of approvals in May. A total of 250 buildings with a value of N$95.8 million were completed during the month. On a year-to-date basis, 975 plans have been approved, 45 more than the 930 plans approved over the same period last year. The year-to-date value of approved building plans currently stands at N$792.3 million, which is 45.6% lower than during the first half of 2017. On a twelve-month cumulative basis, 1,968 building plans were approved worth approximately N$1.5 billion, 38.2% lower in value terms than the same measure as at the end of June 2017.

The majority of the number of building plan approvals were made up of additions to properties. Additions to properties made up 179 plans of the total 234 plans approved in June. Year-to-date, 770 additions to properties have been approved, increasing by 2% y/y but decreasing by 14.5% y/y in value terms to N$524.4 million.

New residential units were the second largest contributor to the number of building plans approved with 53 approvals registered in June, 16 more than in May. 186 new residential units were approved year-to-date, which is 28 more than the corresponding period in 2017. In dollar terms, N$225.1 million worth of residential plans have been approved year-to-date, a contraction of 20.4% when compared to the first half of last year.

2 Commercial and industrial building plans were approved in June, worth N$7.0 million. This is one fewer than in the prior month, but an increase of 128.8% m/m and a decrease of 30.0% y/y in value terms. The number of new commercial units approved thus far in 2018 amounted to 19, valued at N$42.9 million. This compares to 17 units valued at N$561.3 million approved over the same period in 2017. On a 12 month-cumulative basis, the number of commercial and industrial approvals has decreased by 13.3% y/y in June to 52 units, worth approximately N$178.9 million, a decrease of 76.1% in value terms over the prior 12-month period.

During the last 12 months 1,968 building plans have been approved, increasing by 6.5% compared to June 2017. These approvals amounted to N$1.5 billion, which is a decrease in value of 38.2% y/y. Much of this is due to a single project worth N$501 million (Wernhill expansion) included in the base period and not in the current 12-month period. The number of building plans approved, on a cumulative 12-month basis, has been steadily increasing since December 2017.

Our expectation is for the BoN to follow the SARB’s MPC decision to keep interest rates unchanged at next month’s MPC meeting. Consumers and businesses are thus unlikely to be provided with slight cost of debt relief in the near-term, meaning that it will not become more attractive for businesses to acquire the debt finance needed to expand and invest in capital projects. That said, interest rates are unlikely to be the major barrier to capital projects as they remain relatively accommodative. A larger obstacle to securing credit is that banks are weary of the construction industry at present as the balance sheets of many players in the industry are stretched. Another factor affecting the construction industry in Windhoek is the scarcity of land on which to build. We do not expect a significant improvement in the approvals and completions numbers in the short term due to the factors mentioned.

A total of 161 building plans were approved in May by the City of Windhoek, which is three fewer the 164 approvals in April. In value terms, however, approvals increased by N$31.2 million to N$127.7 million, a 32.3% m/m increase from April. A total of 201 completions to the value of N$51.6 million were recorded in May. The year-to-date value of approved building plans reached N$653.9 million, 43.7% lower than the comparative period a year ago. On a twelve-month cumulative basis, 1,916 building plans were approved worth approximately N$1.7 billion, 27.7% lower in value terms than approvals as at the end of May 2017.

Of the total 161 plans approved in May, additions to properties accounted for 121 of these approvals. Year-to-date, 591 additions to properties have been approved, decreasing by 0.8% y/y but rising 24.3% y/y in value terms to N$446.6 million.

New residential units were the second largest contributor to the number of building plans approved with 37 approvals registered in May, only one more than the 36 approvals in April. Year-to-date, 133 new residential units have been approved, three fewer than during the corresponding period in 2017. In monetary terms, N$171.5 million worth of residential plans have been approved year-to-date, a contraction of 31.6% when compared to the corresponding period last year.

Commercial and industrial building plans approved in May amounted to 3 units, worth N$3.1 million. This is two more than in the prior month, but a decline of 61.3% m/m and 99.4% y/y in value terms. Year-to-date, 17 plans for commercial and industrial purposes have been approved, valued at N$35.9 million. This compares to 16 units valued at N$551.3 million approved over the same period in 2017. On a rolling 12-month perspective, the number of commercial and industrial approvals have decreased by 17.7% y/y in May to 51 units.

The 12-month cumulative number of building plans approved increased by 8.0% as at the end of May when compared to the corresponding period in 2017. A total of 1,916 building plans to the value of N$1.7 billion were approved over the last 12 months which represents a decrease in value of 27.7% y/y due to a single project worth N$501 million dropping out of the 12-month cumulative range. The number of building plans approved, on a cumulative 12-month basis, has been increasing steadily since December 2017.

Consumer and business confidence, as measured by the IJG Business Climate Monitor, showed improvement in April 2018, rising to 51.94 points from 50.87 in March. The leading indicator, however, fell to 43.75 points from 47.6 in March, as a result of reduced government spending, a weaker currency and slow private sector credit extension. This is an indication that forecasts for a sustained recovery from the recession observed in 2017 remain fragile. No relief is expected in terms of interest rate cuts or increased fiscal stimulus in the short term.